Why an airline is building a hotel empire in India

InterGlobe Aviation, parent of IndiGo, is expanding into hospitality through a new partnership with French hotel major Accor. The two companies are building a unified hotel management platform with plans to operate 300 properties across India by 2030, targeting the fast-growing mid-market segment.

As part of this plan, Accor and InterGlobe have jointly invested in budget hotel chain Treebo, becoming its largest shareholders. Treebo will now develop and expand Accor’s Ibis and Mercure brands across India. Once operational, the platform is expected to manage 30,000 rooms—marking a major mid-market expansion for Accor.

Read this | Accor, InterGlobe look to inject ‘audacity, vision’ into their hospitality ties, eye 300 hotels by 2030 

For context, India has around 200,000 branded hotel rooms, according to hospitality consultancy Hotelivate’s Trends & Opportunities October report. Of these, about 70,000 rooms—or roughly 39%—are in the upscale to luxury segment, including resorts. That leaves a significant chunk of the market in the mid-scale and budget categories—segments where Treebo operates and where IndiGo might look to build synergy with its customer base.

This renewed push into hospitality comes at a time when domestic travel is booming despite broader economic uncertainty. For IndiGo, which already dominates Indian skies, this marks a strategic pivot: from a low-cost airline to a more integrated travel brand with a global footprint and diversified revenue streams.

But building a hotel empire is a far cry from running an airline. As InterGlobe steps into a deeply fragmented and fiercely competitive hospitality market, the real test will be whether it can scale operations, deliver a consistent guest experience—and turn brand recognition in the skies into loyalty on the ground.

A 20-year-old partnership, reimagined

Accor operates Ibis and Novotel hotels in India through a joint venture (JV) with InterGlobe Hotels, a 60:40 partnership formed in 2004. 

Read this | Hotel investments shift to smaller cities as boom moves beyond tier-I markets

Currently, the group operates 71 hotels in India—30 of them through the JV—and has 40 more under development. The JV had 4,000 rooms as of March 2023, with plans to scale to 6,000 by 2028.

The new platform will consolidate all of Accor’s India operations, uniting them under a single umbrella to streamline management and expansion. Treebo, which currently manages 800 properties in 120 cities, will be the driving force behind Ibis and Mercure’s growth. It has already signed agreements for 10 new Mercure hotels.

The JV’s target—30,000 rooms—could position it among the top three hospitality players in the country, as rising incomes and increasing demand for branded accommodations fuel domestic travel.

Loyalty unlocks global ambition

Beyond hotels, IndiGo is also strengthening customer loyalty. 

The airline has partnered with Accor to link its newly launched BluChip rewards programme with Accor Live Limitless (ALL). The tie-up allows for reward point sharing, co-branded benefits, and seamless two-way point conversion. Members can earn and redeem points across flights, hotel stays, and experiences, extending rewards beyond air travel into the broader hospitality ecosystem.

Read this | IndiGo, Air India ramp up loyalty programmes. But they have a lot to catch up

BluChip, launched in November 2024 to mark IndiGo’s 18th anniversary, has already attracted 2 million members. Accor, meanwhile, ranks among the top two hospitality players in over 20 destinations served by IndiGo across the Middle East and Southeast Asia. With over 1 million members globally, Accor’s ALL programme opens access to a large international customer base—something IndiGo can leverage as it adds more global routes.

The loyalty tie-up boosts brand visibility among overseas travellers and enhances stickiness by offering value beyond just flights. More broadly, it signals IndiGo’s intent to evolve from a no-frills carrier into a full-fledged travel brand built around global connectivity and lifestyle experiences.

IndiGo’s global ambitions take flight

IndiGo is stepping up its international game. 

As per its FY24 annual report, the airline now ranks seventh globally by daily flights—behind Ryanair and China Eastern—and fifth in terms of total passengers carried. In FY24 alone, IndiGo flew 107 million passengers and added 63 aircraft to its fleet.

Read this | IndiGo targets 200 mn fliers by 2030, but faces plane shortage

The company’s international operations, measured by available seat kilometres, currently account for 28% of its capacity—a figure it aims to grow to 40% by 2030. That would mark a steep climb from 14% in FY18, as IndiGo accelerates into underpenetrated markets with lower India-bound traffic.

According to the Directorate General of Civil Aviation (DGCA), IndiGo serves 40 international destinations and holds a 19% share of India’s overseas aviation market. It now wants to raise the revenue share from international operations beyond the current 10% in Q3FY25.

This pivot is part of a broader premiumisation strategy. 

In November 2024, IndiGo rolled out its first-ever business class offering—Stretch—on select domestic routes. Paired with the launch of its BluChip loyalty programme and a hospitality tie-up with Accor, the airline is laying the groundwork for deeper international penetration.

A growing global footprint also brings strategic advantages: notably, a hedge against currency volatility. IndiGo reported a mark-to-market loss of ₹1,400 crore in Q3FY25, triggered by a 2% depreciation in the rupee. Expanding overseas could offer both scale and stability as the airline looks beyond domestic skies.

Backed by historic aircraft orders

To underpin its ambitious growth plans, IndiGo has placed one of the largest aircraft orders in aviation history—925 aircraft set for delivery by FY35. This massive order includes A321XLRs for medium-haul flights and A350 wide-body aircraft for long-haul routes, meaning IndiGo will add one aircraft to its fleet of 437 every week until 2035.

IndiGo sees India as a strategic crossroads for global connectivity. With 65% of the world’s population within a 5-6 hour flight radius, the airline is poised to leverage this geographic advantage to forge efficient connections across multiple regions. This positions IndiGo for substantial international expansion, especially through major global hubs.

The aircraft expansion serves multiple strategic goals: first, to reposition IndiGo beyond a low-cost carrier and capitalize on the growing premiumisation trend to diversify its revenue streams. 

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To that end, IndiGo is increasing its non-ticket revenue, which contributed 10.8% of ticket revenue in FY24. Key drivers of this growth include IndiGo Stretch (business class), the BluChip loyalty programme, and a burgeoning cargo division—all designed to boost passenger revenue and enhance the customer experience.

Markets reward ambition—for now

IndiGo’s broader strategy is already reflected in its market valuation.

For the first nine months of FY25, the airline reported a 15% year-on-year revenue growth, reaching ₹58,651 crore, driven by a 10% increase in revenue passenger kilometers.

However, despite strong revenue growth, net profit dropped 39% to ₹4,180 crore, mainly due to a 500-basis-point decline in Ebitda margin. The depreciation of the rupee, higher lease expenses, and the cost of grounding aircraft all contributed to this margin compression.

For more such analyses, read Profit Pulse.

Currently, IndiGo trades at a price-to-earnings ratio of 32.4, which is approximately 50% above it’s 10-year median P/E of 21.6. This premium reflects the market’s confidence in IndiGo’s global ambitions and dominant position within India’s aviation sector.

Looking ahead, IndiGo’s stock performance will likely depend on its ability to maintain profitability while executing its ambitious expansion plans.

About the author: Madhvendra has over seven years of experience in equity markets and has cleared the NISM-Series-XV: Research Analyst Certification Examination. He specialises in writing detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments. Follow him on LinkedIn.

Disclosure: The writer does not hold the stocks discussed in this article.

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.